November 2006
From the editors of Wolters Kluwer Law & Business, this update describes
important developments from CCH energy publications.
If you have any comments or suggestions concerning the information provided or the format used, we'd like to hear from you. Please send your comments to pamela.maloney@wolterskluwer
Nuclear Power
Stricter Security Requirements for
Nuclear Reactors Proposed
Additional security requirements
for nuclear power reactors and certain facilities that manufacture uranium
fuel have been proposed by NRC. The proposal would expand requirements
related to background checks for firearm users and include authorization
for the use of enhanced weapons as required by the Energy Policy Act of
2005. It would also permit NRC licensees to apply to the Commission to
preempt local, state, and certain federal firearms laws that prohibit
the use of such weapons. (CCH Nuclear Regulation Reporter
¶4228)
National Tracking Plan for Source Materials
Approved
A national source tracking system
(NSTS) has been approved by NRC to improve controls over certain radioactive
materials used for academic, medical and industrial purposes. The new
rule (which will be published in full text when it appears in the Federal
Register) requires licensees to report information on the manufacture,
transfer, receipt, disassembly or disposal of nationally tracked sources
to NRC. Basic information to be collected will include the manufacturer,
model number, serial number, radioactive material, activity and manufacture
date of each source. (CCH Nuclear Regulation Reporter,
No. 1356, November 7, 2006)
Electricity
Some Utilities Relieved of PURPA Mandatory
Purchase Obligation
As required by the Energy Policy
Act of 2005, certain electric utilities will be eligible for exemption
from the mandatory power purchase obligation required of electric utilities
under the Public Utility Regulatory Policies Act of 1976 (PURPA). Specific
independent system operators now provide wholesale markets that meet the
statutory criteria for member utilities to qualify for relief from the
mandatory purchase obligation that requires them to purchase electric
energy from a qualifying facility. These regional transmission entities
meet the statutory test by operating the transmission facilities of their
member utilities and providing open-access transmission services. (CCH
FERC Statutes and Regulations ¶31,233)
Reactive Power Compensation Not Authorized
A group of independent generators
did not have independent contractual authorization to obtain compensation
for their generation of reactive power within their specified power factor
range (within the band) an administrative law judge (ALJ) determined in
a partial initial decision addressing motions for summary disposition
filed by Independent Generators and Entergy Services, Inc. Each of the
independent generators had argued that their individual interconnection
agreements gave them a separate, independent right to recover reactive
service payments regardless of whether Entergy compensated its own generating
units. (KGen Hinds LLC, et al. 117 FERC ¶63,004).
Approval of 83 NERC Reliability Standards
Proposed
The Federal Energy Regulatory
Commission (FERC) has proposed approving 83 of 107 reliability standards
for the nation's bulk-power system, including six of eight regional differences,
and the Glossary of Terms submitted earlier this year by the North American
Electric Reliability Corporation (NERC). In July 2006, FERC designated
NERC as the nation's Electric Reliability Organization (ERO), pursuant
to a new provision to the Federal Power Act (FPA) added by the Energy
Policy Act of 2005 (EPAct 2005) that provides for a system of mandatory,
enforceable reliability standards under FERC's oversight. In a separate
order, FERC conditionally accepted the proposed fiscal-year 2007 business
plan and budget for NERC as well as the budgets for the Regional Entity
candidates. This action will allow NERC to fund its first fiscal year
as the ERO. (CCH FERC Statutes and Regulations ¶32,608)
Electric Cooperatives
Immunity from Antitrust Claims for
TVA, Electric Co-ops Affirmed
The Tennessee Valley Authority
(TVA) and electric cooperatives were immune from state and federal antitrust
law claims brought by members of rural electric cooperatives. The members
challenged contract terms that prohibited the distribution of patronage
refunds. The challenged conduct, which extended beyond protected rate-setting,
was undertaken pursuant to federal law. The TVA was immune based on an
implied repeal of the antitrust laws. The TVA Act authorized the authority
to enter into contracts for the purpose of ``promot[ing] the wider and
better use of electric power for agricultural and domestic use, or for
small or local industries.'' The TVA's primary concern was to provide
services, and concerns about competition would have conflicted with the
fulfillment of TVA's purpose. The TVA was not, however, entitled to immunity
on the basis of its status as a federal corporation. While the TVA had
certain public characteristics, such as the power of eminent domain, it
was organized as a corporation and thus was a ``person'' subject to liability
under the antitrust laws. (McCarthy, et al. v. Middle Tennessee Electric
Membership Corp., et al., 6thCir. CCH Utilities Law Reports
¶14,614)
Hydroelectric Power
AmerenUE To Pay $15 Million in Dam
Breach Settlement
An agreement between the Federal
Energy Regulatory Commission’s Office of Enforcement and Union Electric
Company, doing business as AmerenUE (AmerenUE), resolving all issues arising
from a preliminary investigation of AmerenUE in connection with the breach
of a dam at one of the company’s facilities, was approved by the
Commission. The agreement requires AmerenUE to pay a total of $15 million
and to implement a program to improve the safety and compliance aspects
of managing AmerenUE’s licensed hydroelectric facilities (AmerenUE,
117 FERC ¶61,001).
Natural Gas
FERC to Coordinate Natural Gas Infrastructure
Proposals
As required by the Energy Policy
Act of 2005 (EPAct 2005), the Federal Energy Regulatory Commission (FERC)
will coordinate the environmental review and issuance of all federal authorizations
for natural gas infrastructure proposals with other federal and state
agencies and maintain a consolidated federal record for judicial appeal
and review. Under a new final rule, FERC will act as lead agency for environmental
review and will establish a schedule by which federal agencies, as well
as state agencies acting under federally delegated authority, will reach
final regulatory decisions necessary for the approval of natural gas infrastructure
projects under the Natural Gas Act (NGA). The new rule applies to natural
gas pipelines, compressor stations, storage fields, liquefied natural
gas terminals, and other related facilities. (CCH FERC Statutes
and Regulations ¶31,232)
Blanket Certificate Eligibility for
Gas Projects Expanded
The scope of blanket certificate
eligibility for natural gas infrastructure projects has been expanded
and the limits for project costs have been raised by FERC. The final rule
will extend blanket certificate eligibility to mainlines, underground
storage field facilities, and facilities transporting revaporized liquefied
natural gas, or synthetic or natural gas. The cost limits that apply to
eligible blanket certificate projects have been raised from the current
$8.2 million to $9.6 million for automatic authorizations and from $22.7
million to $27.4 million for prior notice projects. (CCH FERC
Statutes and Regulations ¶31,231)
Energy Information Administration Reports
10.9% Rise in Electricity Prices; Lower
Natural Gas Prices Forecasted by EIA
Residential electricity prices in 2006 are projects to be 10.9%
higher than a year ago, the Energy Information Administration said on
November 7 in its monthly Short-Term Energy Outlook. A month earlier,
in its October Short-Term Energy and Winter Fuels Outlook, the EIA announced
that for the first time since the winter of 2001-02, residential hearing
fuel process are projected to be either lower than or close to prices
prevailing during the previous winter heating season. The rise in electricity
prices coincides with the expiration of a number of temporary retail price
caps that were instituted over the past decade to ease uncertainties associated
with the restructuring of the electric power industry. With regard to
natural gas prices, although the winter forecast calls for colder temperatures
than last year, the weather will be warmer than normal. And, despite the
increase in fuel consumption this year as compared to last year, prices
will be lower because of lower gas prices overall. Details on both these
reports can be found in CCH Utilities Law Reports, Number
1435, November 13, 2006 and CCH Energy Management, Number
1257, October 26, 2006.